Class Action Lawsuit Filed Against MicroStrategy
Pomerantz LLP, a prominent law firm known for its work in securities litigation, has officially announced the initiation of a class action lawsuit against MicroStrategy Incorporated, also known as Strategy. This lawsuit, file in the United States District Court for the Eastern District of Virginia, targets both the company itself and certain key officers. The case centers on allegations of violations of federal securities laws, specifically concerning transactions made by private investors during a defined class period from April 30, 2024, to April 4, 2025.
Details of the Class Action
The class action, identified by the docket number 25-cv-00861, includes all individuals and entities, excluding the defendants, that purchased or acquired shares or other securities of MicroStrategy within the specified dates. The objective of the lawsuit is to obtain damages stemming from the defendants' alleged misconduct under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and the associated Rule 10b-5.
The Company’s Bitcoin-Focused Strategy
MicroStrategy has been in the spotlight for its unique corporate strategy that emphasizes the acquisition and holding of Bitcoin as a long-term treasury reserve asset. This shift began gaining traction in 2020 and accelerated, with the company adopting the label of a “Bitcoin Treasury Company.” It utilized funds from equity and debt financing, along with operational cash flows, to build its Bitcoin holdings, raising questions about the sustainability and risk involved in this approach.
During the class period, MicroStrategy and its executives actively promoted their Bitcoin-focused strategies, introducing new performance indicators such as “BTC Yield,” “BTC Gain,” and “BTC $ Gain,” which they asserted provided investors with valuable insights into the company's financial health.
Adoption of New Accounting Standards
On January 1, 2025, MicroStrategy adopted the Financial Accounting Standards Board's (FASB) new guidance regarding the accounting for crypto assets—specifically, ASU 2023-08. This update mandates that public companies must assess their cryptocurrency holdings at fair value on their financial statements, recognizing resultant gains or losses in each reporting period. Before this update, MicroStrategy had relied on a cost-less-impairment model which allowed them to reflect only impairments on their Bitcoin, thus not accounting for potential appreciation unless they sold the assets.
Despite signaling that the new accounting rule would significantly affect their financials, MicroStrategy failed to disclose the exact nature of these impacts, instead presenting an overly positive outlook regarding its operations as a Bitcoin-focused entity. This included reporting favorable outcomes relative to its BTC metrics while neglecting to mention the substantial losses that would likely follow a fair value assessment of their holdings.
Disclosure of Unrealized Losses
The situation took a drastic turn on April 7, 2025, when MicroStrategy disclosed that it had incurred a staggering $5.91 billion in unrealized losses on its digital assets for the first quarter of 2025 due to the new accounting rules. This resulted in a net loss expectation for the quarter, causing a sharp decline in the company's stock, which dropped 8.67%, closing at $268.14 per share.
Then, on May 1, 2025, the company confirmed these losses during its earnings call, linking them directly to the application of fair value accounting for its Bitcoin holdings after substantial depreciations in Bitcoin value over the quarter.
Pomerantz's Commitment to Justice
Pomerantz LLP, renowned for its expertise in corporate, securities, and antitrust litigation, stands firm in its commitment to serving victims of securities fraud and corporate misconduct, a mission established over 85 years ago by its founder, Abraham L. Pomerantz. The firm has successfully recovered billions in damages for class members in previous cases, looking to continue this success in the current lawsuit against MicroStrategy.
Investors who acquired MicroStrategy securities during the class period have until July 15, 2025, to request to be appointed as lead plaintiffs in this case. Details of the lawsuit, including the complaint, are available at
Pomerantz Law Firm.
For inquiries, interested parties are urged to contact Danielle Peyton at Pomerantz LLP.
Contact Information:
Danielle Peyton
Pomerantz LLP
Email: [email protected]
Phone: 646-581-9980 ext. 7980
Disclaimer: This announcement serves as attorney advertising; previous results do not guarantee similar outcomes.